Caught By Capacity: Why We Stop Growing

February 2004

I just got off the phone with a doctor who had too much experience, too little situational awareness, and a complete aversion to implementing change. This was the good part of the call. He had contacted me to go over his numbers, P&L, and schedule and asked that I offer some insight to the “state of the union”for his practice. Seemed like a very nice doctor who was open to hearing what Ihad gleaned from the numbers. By the time we finished a two hour conversationI had apparently completely alienated and misread him. As far as I can remember, this is the first time this has ever happened. After discovering this, I was so depressed that I even called Max to talk to him. If you’re looking for sympathy after something like this don’t call Max: He has been there, done that. I really felt that I had given this doctor a fair assessment of his practice along with what it would take to create a potential for growth, and in this case I even sugar coated some of the conclusions. It was really worse than I shared with him. He commented that before the call he felt great about his practice, and now it wouldtake him some time to get over the call. He added that while my analysis had some valid points, he felt that he could make any change necessary and that I was far too negative and he felt wounded by my comments.

Here are his practice facts:

DDS is age 50

Minor savings

Four children, the youngest being twin girls that are 5 (If you have not paid for your daughter’s wedding yet, don’t call Max for sympathy. He had two in one year)

He desires to retire by age 60 (within 10 years)

He wishes to be debt free and have a lump sum of $4,000,000 or greater. His current debt is now close to $1,000,000.

The total amount of likely inheritance was less than $200,000 (If he is going to accumulate the money, it will have to come from the practice)

He worked 22 hours a week: Monday, Tuesday, and ½ day on Thursday (Less than 3 peak demand times per week)

Produces $75,000/month

He does produce over $7,500/New Patient

Averages 13.2 new patients per month (Less than 25% were direct referrals and therefore he is not inspiring the meager number of patients he is getting.)

His overhead exceeds 70%

Hygiene only produces 18% of the revenue (It should be 33%)

Ratio of DDS/population in his zip code was 1/638 (It needs to be at least 1/2000. This is a very competitive area)

Average household income in his area was $31,000

He lives in one of the most competitive areas in the Northeast, most expensive economies in the US, and a very low economic earning capacity with diminished education levels.

He is waiting for the down turn to blow over. It will not.

He commented that if he could just produce $125,000/month everything would fall into place. He added that: “I know that my practice is in the top 1% of all dental practices in the United States”. He feels he just needs some coaching to put him on the right road.

At this point I almost fell out of the chair. In the face of terrible numbers and a questionable economy and demographics for his area, he felt he was in the top 1% (Maybe the lower 50%, but definitely not the top 1%). Once again, I felt like I was playing “Truth or Consequences”. In a case like this I try to ask myself what Max would do in this situation: Tell him the truth or save it for another day. I chose wrong. He could not handle the truth. I pointed out the difficulties in increasing new patients in the most competitive areas for dentistry in the US. Infact I offered to send him an article about donor practices and recipient practices.

While I tried to sugar coat the bad news, he was indignant when I told him that most general practices need 50-75 new patients per month, that their hygiene departments will generate 33% of the total production, the office was open at least 32 hours a week during peak demand times, that we try to push our clients to have a 50-60% overhead, and that even a recent graduate can produce over $75,000/month by the end of 12-15 months with the right location and proper coaching.

That just about did it. There was nothing but silence from the other end of the phone. He asked if I thought he would be able to make the changes that would give him the goals of retirement in ten years, all debt paid, and $4,000,000 in hand. I replied that while anything is possible, I doubted that most doctors in his situation would be willing to do what it would take to make this happen. That to accomplish this feat there would need to be a full court press, whatever ittakes, no do-over approach to his practice growth. Most doctors are just not willing to make a commitment like that. It was as if I had called him a bad name. I just wanted him to understand how difficult the task would be. He ended the call and even though I offered to help him at no charge and even sent him more information, he was sure that I would not be able to help him. I was left scratching my head and wondering how I could have done better. I did this doctor an injustice by not making the information more digestible. The bad news is that I really never got around to the real reason I felt that he would struggle to improve his situation and be able to retire with $4,000,000 at age 60. All this to say: Every practice is working at capacity. This practice IS a 70%+ overhead practice that inspires less that thirteen new patients a month, owned and led by a doctor who never learned how to save for the future, or strategically run a small consumer driven business. His numbers and statistics are the result of how he operates every day: Hours, systems, staff, personality, fees, overhead, location… If you want to grow, you have to embrace change, inspire your patients, and act. Doing what he does, when and where he does it, will not change the numbers. If he wants to take his practice to the next level, he has to get there first. Sometimes a change in circumstance requires a change in direction. A change in direction requires overcoming the momentum of what you created in the past. It is this momentum that creates the “capacity” of your practice. That momentum, if you are doing well, makes it even easier to continue your winning ways. If the momentum is in the wrong direction, you are faced with the difficult task of turning the practice around. You basically will expend almost all of your energy fighting that momentum just to stop the bleeding. Once the bleeding is under control, you have to come up with another burst of energy to make the changes necessary to start all over again in the right direction. Everything counts. Everything matters.

So what is Capacity? It is delivering a service to a patient when they want itin a way that they can afford it. If you think about it, we all have a “General Practice”. I know that some of you bill yourselves as a “cosmetic” dentist, sedation dentist, or implant specialist, but you all started as general practitioners. For most of us, the longer we practice, the more income is derived from crown and bridge and higher end elective cases. You could even say that everything but an extraction is elective. As we age, our competence and confidence should increase. With this increase in knowledge and comfort discussing treatment, we should become more profitable. This is where it all breaks down. We do not all progress in our careers. We do not all have choices. We forgot to program in down economies, poor habits, lack of learning and even less application of what we learn, and even successfully ending two or three marriages prior to finding that right girl some 20 years our junior. We begin to coast. This leads to drifting, and drifting leads to finding ourselves in places we never wanted to go. We find ourselves a statistic. We made the curve. We became the average dentist. The statistic with no choices at the end of a career of affluence lived beyond our means. We face dying in our practices because we never learned to save. We stopped a long time ago living a purpose driven, intentional life filled with goals and accomplishments. We forgot why we entered the profession and where we wanted to carry our practices from day one.

Well, I have a solution; a plan; a life’s strategy. It is never too late, it has always worked, and it will work for you if you will embrace it. It is the chip I wear on my shoulder and I call it “a little guy attitude”.

In football it is size and speed. In baseball and tennis it is speed and eye/hand coordination. Add the perfect genes and early childhood training and you have the making of a super athlete. For me, it was not to be. I must have been about 13 years of age while weighing 80 lbs. and 4 foot nothing lined up against another 7thgrader who was 6 ft. tall, receding hair line, and a days growth of beard, when I realized I was not gifted with any “natural” ability for sports. I guess I still resent the A-team guys who seemed to always be in the lime light and got to date the cheerleader. Every one of us comes up short on something. We were not quite as big, as smart, or good looking. That’s why I have the “little guy attitude”. I am always looking for a head start or an edge to compensate for my short comings. I embrace Jim Rhone’s “Ant Philosophy”.

Ants never give up. They come up against an obstacle: They go over it, around it, or under it. They never give up. Ants think winter all summer. You can’t think summer all summer. You need to save and plan for the future. Ants think summer all winter. Always optimistic. The first sunny day, they are out working and thinking summer all winter. Weather changes, they are back underground. We could all benefit by being more like ants. Persistence and foresight win over shear talent any day.

What could this possibly have to do with dentistry? Everything. My fear of failure coupled with an obsession to do better than anyone else, drove me to excellence in my chosen profession. Lessons from a life of wanting to do better can be a help to everyone. Read and embrace these bullet points to become the dentist you always knew you would be.

Situational awareness. Stop denying the facts. They are what they are. If you have been in the same location for 15 years you may be in the wrong location. Demographics, economy, race, and income levels change. You also need to change. On a golf course you don’t play the entire game with a putter. There are different clubs for different lies, wind, and distance. Be flexible. Be proactive. Adapt.

Fail forward. Everyone fails. You only really fail if you don’t get up. Want to succeed? Double your failure rate. Do something. Act. I find too many doctors demonstrating paralysis through analysis. Even with what you guys pay a coach, you still fail to act on strategies that are proven to get results. You give change and action lip service. Act now. Waiting is over rated.

Never give up. It is never too late to change your circumstances. We have all had hiccups. Each of us has a story. You can change the ending to anything you want.

Embrace change. When you are done with change, you are done. Period. Over the last thirty years the one constant in dentistry and every small consumer driven business has been change. In addition to yourself, you need to surround yourself with a team who also embrace change with positive expectancy.

Every practice works at capacity. If you do not like your results, start increasing the rate of change. We have all heard that doing the same thing over and over again while expecting a different result is a symptom of insanity. It is not going to get better by itself. You have to take the steps to insure a positive result.

The strength of your practice systems will ultimately determine the range of patients that you can inspire. A practice based solely on the personality and charisma of the doctor cannot be sold. Remove the doctor and the practice fails. Only systems make your practice reproducible. One based on systems, leadership, staff, and purpose is reproducible and extremely valuable.

The only limits to practice growth are those you have consciously orunconsciously imposed on yourself. Most practices that struggle are held captive by the expectations of the doctor. If you want more, you have to be more. Nothing happens by accident. Million dollar practices are created, they don’t just happen.

Balance. We all have our dance cards full. You begin something new, and you have to give up something to fit it in. We all cheat and steal. You will either steal from your family, faith or business. Choose wisely. We all have the same amount of time. Keep in mind that on every grave stone is a “born on” date, a dash, and a “use before” date. We spend our entire lives working on the “dash”. What will your dash say about your life? If you would like to see a preview, pull out your check books and look at what you spend your money on. Your money will be where your heart lies.

Give back. Part of learning life’s lessons is teaching life’s lessons. Take the time to mentor someone.

Don’t believe your own press or what others say about you. This was a hard one for me. Always be able to look in the mirror and see the real you.

Every practice has a range of patients it can inspire. If you are not growing, you are not inspiring you patients. Inspiration means referrals, and unlimited growth. You can’t get better at giving patients what they don’t want. Never get caught thinking that patients only want what you have to sell them. Listen and happily give them what they want, and tell them what they need.

Say thank you to those who helped you. The first job of a leader is to define what is core. To cast the vision. The last job of a leader is to say thank you to all those who got you where you are.

Become a Leader. Everyone needs to be the leader in their practices. Enthusiasm filters down from the top. Your staff and business needs direction. Step up and become the dentist you always wanted to be.

Practice growth and profitability can be very predictable. Call my cell at 972-523-4660 and let me help you create choices for you and your family.